Directs the commissioner of health to establish a pilot program to assist in the restructuring of health care delivery systems by authorizing increased capital investments in health care facilities.
TITLE OF BILL: An act to amend the public health law, in relation to directing the commissioner of health to establish a pilot program to assist in the restructuring of health care delivery systems by authorizing increased capital investments in health care facilities
PURPOSE: Authorizes establishment of a pilot program allowing for increased capital investment in health care facilities.
SUMMARY OF PROVISIONS:
Section one amends Public Health Law (PHL) § 2801-a to authorize the Commissioner of Health to establish a pilot program to assist in restructuring health care delivery systems by allowing for increased capital investment in health care facilities. Under this pilot, the Public Health and Health Planning Council (PHHPC) shall approve the establishment of no more than five business corporations. In order to be eligible for the program, the business corporation must affiliate with an academic medical institution or teaching hospital and shall not have any of its stock, or any stock of its direct or indirect owners, traded on the public stock exchange.
Business Corporations established under this section shall be eligible to participate in debt financing provided by the Dormitory Authority of the State of New York, local development corporations and economic development corporations. The corporate powers and purposes of a business corporation established under this program shall be limited to ownership and operation, or operation, of a specified hospital; provided, however, that the powers and purposes may also include ownership and operation, or operation, of a certified home health agency or licensed home care services agency or agencies or hospices. The pilot program also requires the board of directors, committees of the board and individual directors and officers of the board to take into consideration a number of factors in discharging their duties, including the interests of patients, and community and societal considerations.
The Commissioner shall provide an evaluation of the pilot program within two years of the establishment of a business corporation under this section.
Section two provides this act shall take effect immediately.
JUSTIFICATION: Many health care facilities in New York State suffer from inadequate investment for capital improvements, upgrades and expansion. Private equity is a source of funding in many sectors, but in New York's health care sector, such investing is limited. By statute, ownership is limited to individuals who are subject to character and competence reviews, thus business corporation are ineligible.
The Governor and Senate both advanced initiatives allowing for increased capital investment in health care facilities on a demonstration basis in their respective SFY 2013-14 budget proposals. This legislation represents the culmination of discussions had during budget negotiations. This bill would allow for a pilot program
consisting of five business corporations. The bill prohibits publicly traded corporations from partaking in the program and provides a number of other safe guards such as requiring the board of directors to take into account a number of factors in discharging their duties and requiring the Commissioner's approval prior to the sale or transfer of all or essentially all assets.
This would not be the first venture into private ownership of health care facilities for New York. Several years ago certain diagnostic and treatment centers, which provide dialysis services, were granted an exception due to the severe shortage of service providers. That exception has proven successful in assuring access to quality services. The instant legislation is designed to build on that success and provide much needed capital to certain hospitals on a demonstration basis.
LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediately.
STATE OF NEW YORK ________________________________________________________________________ 5092 2013-2014 Regular Sessions IN SENATE May 8, 2013 ___________Introduced by Sen. HANNON -- read twice and ordered printed, and when printed to be committed to the Committee on Health AN ACT to amend the public health law, in relation to directing the commissioner of health to establish a pilot program to assist in the restructuring of health care delivery systems by authorizing increased capital investments in health care facilities THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 2801-a of the public health law is amended by adding a new subdivision 17 to read as follows: 17. (A) THE COMMISSIONER IS AUTHORIZED TO ESTABLISH A PILOT PROGRAM TO ASSIST IN RESTRUCTURING HEALTH CARE DELIVERY SYSTEMS BY ALLOWING FOR INCREASED CAPITAL INVESTMENT IN HEALTH CARE FACILITIES. PURSUANT TO THE PILOT PROGRAM, THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL SHALL APPROVE THE ESTABLISHMENT, IN ACCORDANCE WITH THE PROVISIONS OF SUBDIVI- SION THREE OF THIS SECTION, OF NO MORE THAN FIVE BUSINESS CORPORATIONS FORMED UNDER THE BUSINESS CORPORATION LAW. SUCH BUSINESS CORPORATIONS SHALL AFFILIATE, THE EXTENT OF THE AFFILIATION TO BE DETERMINED BY THE COMMISSIONER, WITH AT LEAST ONE ACADEMIC MEDICAL INSTITUTION OR TEACHING HOSPITAL APPROVED BY THE COMMISSIONER. A BUSINESS CORPORATION SHALL NOT BE ELIGIBLE TO PARTICIPATE IN THIS PROGRAM IF ANY OF ITS STOCK, OR THAT OF ANY OF ITS DIRECT OR INDIRECT OWNERS, IS OR WILL BE TRADED ON A PUBLIC STOCK EXCHANGE OR ON AN OVER-THE-COUNTER MARKET. (B) NOTWITHSTANDING ANY PROVISION OF LAW TO THE CONTRARY, BUSINESS CORPORATIONS ESTABLISHED PURSUANT TO THIS SUBDIVISION SHALL BE DEEMED ELIGIBLE TO PARTICIPATE IN DEBT FINANCING PROVIDED BY THE DORMITORY AUTHORITY OF THE STATE OF NEW YORK, LOCAL DEVELOPMENT CORPORATIONS AND ECONOMIC DEVELOPMENT CORPORATIONS. (C) THE FOLLOWING PROVISIONS OF THIS CHAPTER SHALL NOT APPLY TO BUSI- NESS CORPORATIONS ESTABLISHED PURSUANT TO THIS SUBDIVISION: (I) PARA- GRAPH (B) OF SUBDIVISION THREE OF THIS SECTION, RELATING TO STOCKHOLD-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10580-01-3 S. 5092 2
ERS; (II) PARAGRAPH (C) OF SUBDIVISION FOUR OF THIS SECTION, RELATING TO THE DISPOSITION OF STOCK OR VOTING RIGHTS; (III) PARAGRAPH (E) OF SUBDI- VISION FOUR OF THIS SECTION, RELATING TO THE OWNERSHIP OF STOCK; AND (IV) PARAGRAPH (A) OF SUBDIVISION THREE OF SECTION FOUR THOUSAND FOUR OF THIS CHAPTER, RELATING TO THE OWNERSHIP OF STOCK. NOTWITHSTANDING THE FOREGOING, THE PUBLIC HEALTH AND HEALTH PLANNING COUNCIL MAY REQUIRE THE DISCLOSURE OF THE IDENTITY OF STOCKHOLDERS, PROVIDED THAT THE NUMBER OF STOCKHOLDERS DOES NOT EXCEED THIRTY-FIVE. (D) THE CORPORATE POWERS AND PURPOSES OF A BUSINESS CORPORATION ESTAB- LISHED AS AN OPERATOR PURSUANT TO THIS SUBDIVISION SHALL BE LIMITED TO THE OWNERSHIP AND OPERATION, OR OPERATION, OF A HOSPITAL OR HOSPITALS SPECIFICALLY NAMED AND THE LOCATION OR LOCATIONS OF WHICH ARE SPECIF- ICALLY DESIGNATED BY STREET ADDRESS, CITY, TOWN, VILLAGE OR LOCALITY AND COUNTY; PROVIDED, HOWEVER, THAT THE CORPORATE POWERS AND PURPOSES MAY ALSO INCLUDE THE OWNERSHIP AND OPERATION, OR OPERATION, OF A CERTIFIED HOME HEALTH AGENCY OR LICENSED HOME CARE SERVICES AGENCY OR AGENCIES AS DEFINED IN ARTICLE THIRTY-SIX OF THIS CHAPTER OR A HOSPICE OR HOSPICES AS DEFINED IN ARTICLE FORTY OF THIS CHAPTER, IF THE CORPORATION HAS RECEIVED ALL APPROVALS REQUIRED UNDER SUCH LAW TO OWN AND OPERATE, OR OPERATE, SUCH HOME CARE SERVICES AGENCY OR AGENCIES OR HOSPICE OR HOSPICES. SUCH CORPORATE POWERS AND PURPOSES SHALL NOT BE MODIFIED, AMENDED OR DELETED WITHOUT THE PRIOR APPROVAL OF THE COMMISSIONER. (E) (1) IN DISCHARGING THE DUTIES OF THEIR RESPECTIVE POSITIONS, THE BOARD OF DIRECTORS, COMMITTEES OF THE BOARD AND INDIVIDUAL DIRECTORS AND OFFICERS OF A BUSINESS CORPORATION ESTABLISHED PURSUANT TO THIS SUBDIVI- SION SHALL CONSIDER THE EFFECTS OF ANY ACTION UPON: (A) THE ABILITY OF THE BUSINESS CORPORATION TO ACCOMPLISH ITS PURPOSE; (B) THE SHAREHOLDERS OF THE BUSINESS CORPORATION; (C) THE EMPLOYEES AND WORKFORCE OF THE BUSINESS; (D) THE INTERESTS OF PATIENTS OF THE HOSPITAL OR HOSPITALS; (E) COMMUNITY AND SOCIETAL CONSIDERATIONS, INCLUDING THOSE OF ANY COMMUNITY IN WHICH FACILITIES OF THE CORPORATION ARE LOCATED; (F) THE LOCAL AND GLOBAL ENVIRONMENT; AND (G) THE SHORT-TERM AND LONG-TERM INTERESTS OF THE CORPORATION, INCLUD- ING BENEFITS THAT MAY ACCRUE TO THE CORPORATION FROM ITS LONG-TERM PLANS. (2) THE CONSIDERATION OF INTERESTS AND FACTORS IN THE MANNER REQUIRED BY PARAGRAPH ONE OF THIS PARAGRAPH: (A) SHALL NOT CONSTITUTE A VIOLATION OF THE PROVISIONS OF SECTION SEVEN HUNDRED FIFTEEN OR SEVEN HUNDRED SEVENTEEN OF THE BUSINESS CORPO- RATION LAW; AND (B) IS IN ADDITION TO THE ABILITY OF DIRECTORS TO CONSIDER INTERESTS AND FACTORS AS PROVIDED IN SECTION SEVEN HUNDRED SEVENTEEN OF THE BUSI- NESS CORPORATION LAW. (F) A SALE, LEASE, CONVEYANCE, EXCHANGE, TRANSFER, OR OTHER DISPOSI- TION OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS OF THE CORPORATION SHALL NOT BE EFFECTIVE UNLESS THE TRANSACTION IS APPROVED BY THE COMMISSIONER. (G) NO LATER THAN TWO YEARS AFTER THE ESTABLISHMENT OF A BUSINESS CORPORATION UNDER THIS SUBDIVISION, THE COMMISSIONER SHALL PROVIDE THE GOVERNOR, THE MAJORITY LEADER OF THE SENATE AND THE SPEAKER OF THE ASSEMBLY WITH A WRITTEN EVALUATION OF THE PILOT PROGRAM. SUCH EVALUATION SHALL ADDRESS THE OVERALL EFFECTIVENESS OF THE PROGRAM IN ALLOWING FOR ACCESS TO CAPITAL INVESTMENT IN HEALTH CARE FACILITIES AND THE IMPACT SUCH ACCESS MAY HAVE ON THE QUALITY OF CARE PROVIDED BY HOSPITALS OPER- ATED BY BUSINESS CORPORATIONS ESTABLISHED UNDER THIS SUBDIVISION. S 2. This act shall take effect immediately.